Termite Clause
Overview
A Termite Clause is a provision in a real estate sales contract that permits the buyer to inspect the property for termite infestation. This clause ensures that if termites or other wood-destroying insects are discovered, the responsibility falls onto the seller to remedy the situation, often through extermination or repairs. This clause may also give the buyer the right to cancel the contract if significant infestations are discovered. Frequently, this clause is updated to encompass other destructive insects, offering broader protection to the buyer and their potential new property.
Examples
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Residential Home Sale:
In a home sale contract, the termite clause might state, “The buyer has the right to conduct a termite inspection within 10 days after the contract’s effective date. If termites are found, the seller must treat the property with a licensed pest exterminator at the seller’s expense.”
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Commercial Property Transaction:
In a commercial property contract, the clause may read, “Should the inspection reveal the presence of termites or wood-destroying insects, the seller agrees to perform the necessary treatment and repairs before closing. Failure to meet these conditions grants the buyer the right to withdraw from the contract without penalty.”
Frequently Asked Questions
Q: What does a termite inspection involve?
A: A termite inspection typically includes a visual examination of accessible areas of the property by a licensed pest control professional to check for signs of termites and other wood-destroying insects.
Q: Who pays for the termite inspection?
A: Typically, the buyer pays for the termite inspection. However, it is common for the sales contract or termite clause to stipulate that the seller covers the cost of any necessary treatments or repairs.
Q: Can the buyer cancel the contract if termites are found?
A: Yes, depending on the specifics of the termite clause, the buyer may be allowed to cancel the contract if termites or significant damage is found and the seller is unwilling or unable to address the issue satisfactorily.
Q: How common is it to include a termite clause in a real estate contract?
A: It is quite common to include a termite clause, especially in areas known for termite activity. It protects the buyer from unforeseen expenses related to wood-destroying insects.
Q: Are other insects besides termites covered by a termite clause?
A: Yes, many modern termite clauses have been updated to include various wood-destroying insects such as powder post beetles and old house borers.
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Wood-Destroying Insects (WDI): Insects that damage wooden structures, including termites, powder post beetles, and carpenter ants. WDI clauses in contracts provide broader pest protection.
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Inspection Contingency: A clause in a real estate contract allowing the buyer to inspect the property and negotiate repairs or withdraw from the deal based on the inspection results.
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Extermination Clause: A specific provision relating to the requirement of pest control and eradication, often initiated by the discovery of termites or similar pests.
Online Resources
- National Pest Management Association
- American Society of Home Inspectors
- EPA Termite Control
References
- National Association of Realtors – “Termite Infestation Inspection” factsheet.
- “Home Inspections 101” by American Society of Home Inspectors
Suggested Books for Further Studies
- “Inspecting a House” by Rex Cauldwell - Insightful coverage of home inspection techniques.
- “The Home Inspection Book: A Guide for Professionals” by Marcia Darvin Spada - comprehensive guidebook on home elements and inspection methodologies.
- “The Visual Handbook of Building and Remodeling” by Charles Wing - Extensive illustrations and explanations of potential infestations during renovations and inspections.
Real Estate Basics: Termite Clause Fundamentals Quiz
### What is the primary purpose of a termite clause in a sales contract?
- [ ] To decorate the contract.
- [x] To allow for termite inspection and define responsibilities for treatment.
- [ ] To reduce the sale price.
- [ ] To prolong negotiation time.
> **Explanation:** The primary purpose of a termite clause is to allow for a termite inspection and delineate the responsibilities for treatment or potential contract termination in case of infestation.
### Who usually covers the costs of extermination if termites are found during inspection?
- [x] The seller
- [ ] The buyer
- [ ] The real estate agent
- [ ] A third-party insurer
> **Explanation:** Most termite clauses stipulate that the seller covers the costs of extermination if termites are found during the buyer-initiated inspection.
### What option does the buyer have if termites are discovered and the seller does not remediate the problem satisfactorily?
- [ ] Sue the real estate agent
- [ ] Reduce the bid price
- [x] Cancel the contract
- [ ] Withhold future payments
> **Explanation:** If termites are discovered and not properly remediated by the seller, most termite clauses provide the buyer with the option to cancel the contract without penalty.
### Which party is responsible for arranging the termite inspection?
- [ ] The title company
- [ ] The mortgage lender
- [x] The buyer
- [ ] The seller
> **Explanation:** The buyer is typically responsible for arranging and paying for the termite inspection as part of the due diligence process.
### What is included under the term "wood-destroying insects"?
- [ ] Moths and butterflies
- [ ] Grasshoppers
- [x] Termites, powder post beetles, and old house borers
- [ ] Bees and wasps
> **Explanation:** The term "wood-destroying insects" encompasses termites, powder post beetles, and old house borers, among others recognized to cause damage to structures.
### Is a termite clause mandatory in all real estate transactions?
- [ ] Yes, always.
- [ ] No, it is illegal in some states.
- [x] No, but it is common practice, especially in high-risk areas.
- [ ] Yes, but only for new constructions.
> **Explanation:** A termite clause is not mandatory, but it is common practice in real estate transactions, particularly in regions with high termite activity.
### How long does a typical termite inspection take?
- [x] 1-2 hours
- [ ] 24 hours
- [ ] 5-7 days
- [ ] It depends on the weather.
> **Explanation:** A typical termite inspection usually takes about 1-2 hours depending on the size of the property and the thoroughness required by the inspector.
### What role do real estate agents play concerning termite clauses?
- [x] They help include the clause in contracts and advise clients.
- [ ] They will conduct the inspection.
- [ ] They must pay for any extermination services required.
- [ ] They remove termites if found.
> **Explanation:** Real estate agents assist by ensuring the termite clause is included in sales contracts and advising clients on its necessity and function.
### Can a termite inspection and treatment alter the sale closing date?
- [x] Yes, if additional treatment and repairs are necessary.
- [ ] No, closing dates are fixed.
- [ ] Only if all parties agree.
- [ ] It's illegal to alter a closing date on this basis.
> **Explanation:** Yes, termite inspection and subsequent treatment can delay the sale closing date as the property might require extensive remediation before the sale can proceed.
### What should be done if significant termite damage is detected?
- [ ] Ignore it and proceed.
- [x] Negotiate repairs or rethink the purchase.
- [ ] Immediately lower the offer.
- [ ] Consult a tax professional.
> **Explanation:** Significant termite damage should trigger negotiations for repair by the seller, or, depending on the termite clause, the buyer may rethink the purchase if the resolution is unsatisfactory.
